ii international transport and logistics business forum «kazakhstan new silk way »

November 07, 2013

II International Transport and Logistics Business Forum «Kazakhstan New Silk Way»Session 2: Kazakhstan – Regional Air Hub

Moderated by: Thomas J. NiehausAssociate Partner & Manager for the CIS region

http://forum.kazlogistics.kz/en/

http://forum.kazlogistics.kz/en/

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The scheduled airline network currently connects Kazakhstan heavily to Russia, but also Europe, Asia and Middle East

Source: AirportIS

Scheduled flights to/from Kazakhstan, all carriers, summer 2013 Aviation environment

currently undergoes a dramatic development in Kazakhstan ICAO team working on

implementing international quality and safety standards (incl. some airlines having their AOC revoked)

aim to remove the EU blacklisting of airlines in Kazakhstan

Airport development in Kazakhstan aiming at new levels of service and infrastructure

Airlines growing network and hence passenger and cargo business

II International Transport and Logistics Business Forum «Kazakhstan New Silk Way»

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Within 5 years overall air traffic on markets to and from Kazakhstan is expected to grow 14%


Expected growth of the O&D traffic to and from Kazakhstan by 2018

Note: CAGR = Compound annual growth rate, O&D = origin and destination:Source: Lufthansa Consulting, AirportIS, IMF GDP forecast

…

KeyRegional distribution of traffic 2018

Middle East

Turkey~ 4%

+13% ~5%

+14%

~10%

+11%

~15%

+13%

<1%

+13%

America

~ 43%

+13%~9%

+15%

RussiaEurope

Domestic KZ

~7%

+16%

~6%

+14% Asia PacificChina

CIS

… CAGR 2014–2018 growth

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4,066,738.04,015,996.0

2,938,157.0

2,458,696.02,456,724.02,279,624.02,168,365.02,150,950.02,066,300.02,006,173.0

1,841,858.0

730,055.0561,173.0

541,141.00

508,040.0326,995.0268,642.0262,287.0131,372.0

83,828.00

27,560.0025,866.00

8,425.00

Almaty is the biggest cargo airport in Kazakhstan and CIS, but like other Russian & CIS airports is dominated by international inbound cargo

Note: ALA figure is for 2011 (latest available year); MOW figure is the sum of volumes of SVO, DME, VKOSources: Albatross Database, ACI, Lufthansa Consulting Analysis

Air-Cargo (incl. mail) tons in 2012 – selected airports In 2012 approx. 100 thousand tons

or air cargo have been transported at airports in Kazakhstan

Due to the structure of the economy air cargo mainly are international inbound goods for consumption or materials for productive usage

Even all three Moscow airports ‘only’ handled 540 thousand tons of air cargo

Larger cargo volumes at other airports are driven by a passenger airline actively

developing the business within their passenger aircraft bellys and/or

a full freighter airline

In Kazakhstan the local passenger airlines only play a minor role in the cargo business so far



The main targeted lever of growth in air cargo therefore lies in participating in the international transfer cargo market

Source: KTZ Express, Lufthansa Consulting analysis

By 2020 the Government strategy is to increase total international transfer cargo flows via Kazakhstan by 81% in 2010 Kazakhstan handled 18 million tons

of cargo in 2020 the objective is to handle 32 million

tons

Currently the share of international transfer air cargo of total international transfer cargo is < 0,1%

Part of the Government strategy is to create an intermodal transfer hub which mainly focuses on cargo flows from

East to West (e.g. CN EU & RU), but also acts as a distribution center within

Kazakhstan and connects rail, road and air transport

Kazakhstan as intermodal transfer hub for cargo

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Projections of future transfer cargo flows directions indicate where air freight as part of the intermodal chain should focus on

Source: KTZ Express, Lufthansa Consulting Analysis

International transfer cargo flows via Kazakhstan – historic and projected volumes Major growth is targeted within the

China trade flows (mainly east-west) to/from EU Russia Uzbekistan Iran

Next to China also cargo flows to / from Russia are expected to grow significantly (north-south-north)

Within an intermodal transfer hub the strategy needs to take into account the specifics of airfreight, but also needs to connect the main streams to an airport


Direction 2010 2020 2030 Growth 2010-20China-EU-China 125 5.368 7.483 4194%EU-Korea-EU 0 583 747 -EU-Japan-EU 0 477 575 -

China-Russia-China 2.446 5.481 7.993 124%China-Uzbekistan-China 1.403 2.647 4.691 89%China-Iran-China 0 1.708 3.327 -

Russia-Uzbekistan-Russia 3.060 4.755 6.297 55%Russia-Tadjikistan-Russia 1.569 2.514 3.694 60%Russia-Kyrgyzstan-Russia 1.400 2.368 3.813 69%Russia-Afghanistan-Russia 795 1.477 2.184 86%Russia-Turkmenistan-Russia 455 916 1.622 101%Russia-Iran-Russia 16 502 740 3038%Russia-Korea-Russia 0 224 301 -Russia-Japan-Russia 0 145 195 -

Korea-Uzbekistan 34 111 149 226%Japan-Uzbekistan 1 3 4 200%Japan-ТТК 1 3 4 200%Korea-ТТК 0 20 32 -Other 2.668 3.252 3.965 22%Total: 13.974 32.555 47.816 133%

Global comparison of LPI*


The Logistics Performance Index measures the logistics environment of most of the countries worldwide, highlighting the needs for improvement

* Logistics Performance Index; Sources: World Bank, Logistics Performance Index (LPI) 2012, Lufthansa Consulting Analysis

Criteria measured by LPI: Efficiency of the customs clearance process, quality of trade and transport infrastructure, ease of arranging competitively priced shipments, competence and quality of logistics services, ability to track and trace consignments, timeliness of shipments in reaching destination within scheduled delivery time

Kazakhstan is ranked 86th:1. Singapore 4,132. Hong Kong 4,12...27. Turkey 3,51...77. Georgia 2,77...85. Dominican Republic 2,7086. Kazakhstan 2,6987. Niger 2.69...91. Belarus 2,61...95. Russian Federation 2,58

The country is currently targeting to be within the top 40 positions by 2020

Countries with LPI from 3.5 to 5

USA = 3,93

China = 3,52

UK = 3,90

Germany = 4,03

Legend1: lowest score; 5: highest score

Canada = 3,85

Turkey: 3,51

UAE: 3,78

Kazakhstan: 2,69

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Kazakhstan and regional competitors - LPI* comparison


In the Logistics Performance Index Kazakhstan ranks 86th, with substantial upgrades needed to improve its transport environment

*Logistics Performance Index; Sources: KTZh, World Bank, Logistics Performance Index (LPI) 2012, Lufthansa Consulting Analysis

Kazakhstan shows substantial improvement potential especially in regards to general logistics infrastructure, customs procedures, and service quality but also timeliness of shipments

in reaching the designed destination

The country is currently targeting to be within the top 40 positions by 2020

China Turkey Georgia Kaza-khstan

Belarus Russia2

2.22.42.62.8

33.23.43.63.8

4

3.52 3.51

2.77 2.69 2.61 2.58

LPI Total 3,52 3,51 2,77 2,69 2,61 2,58Customs 3,25 3,16 2,90 2,58 2,24 2,04Infrastructure 3,61 3,62 2,85 2,60 2,78 2,45Services 3,46 3,38 2,68 2,67 2,58 2,59Competence 3,47 3,52 2,78 2,75 2,65 2,65Track & trace 3,52 3,54 2,59 2,83 2,58 2,76Timeliness 3,80 3,87 2,86 2,73 2,87 3,02

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Contact

Lufthansa Consulting GmbHVon-Gablenz-Straße 250679 CologneGermany

Mob: +49 151 589 405 11

e-mail:[email protected]

www.LHConsulting.com

Thomas NiehausAssociate PartnerManager for the CIS region

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Lufthansa Systems Agencies

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Partner- ships

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CIS and Russia are among the most important markets of Lufthansa Consulting's business with each a dedicated regional manager

Lufthansa Consulting markets areas of expertise

Airline Restructuring &

Commercial

Restructuring

Commercial

Airline Operations

Operations

Maintenance &Engineering

Air Cargo

Infrastructure and Logistics

Air Cargo Management

Airports

Economics

Development

Airline Strategy & Network

Strategy

Network Management

Combination of relevant expertsfor each project

Market & Services

Lufthansa Group

Mediterr. Region Russia Middle

East AmericasEurope CIS Africa North

Africa South


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Contact

Lufthansa Consulting GmbHVon-Gablenz-Straße 250679 CologneGermany

Mob: +49 151 589 405 11

e-mail:[email protected]

www.LHConsulting.com

Thomas NiehausAssociate PartnerManager for the CIS region


ii international transport and logistics business forum «kazakhstan new silk way »

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